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AHA Roundtable

A Historic Day for Health Reform

Beatrix Hoffman, July 2012

It is a historic day for health reform. The Supreme Court’s decision to uphold most of the 2010 Affordable Care Act (ACA) means that the United States will come closer to insuring all its citizens than ever before in history. Millions who had previously been excluded because of their health conditions or because they could not afford coverage will be able to join the system.

But even if the law is implemented to its fullest extent, the United States will still not have universal coverage. As the Supreme Court emphasized, citizens will be able to opt out by paying a fine (which the majority crucially defined as a tax). The expansion of Medicaid coverage to people earning up to 133% of the poverty level was an essential mechanism for insuring low-income citizens, but the Court has now declared unconstitutional the government’s ability to withhold federal Medicaid funds from states refusing to enact the coverage expansion. If they can’t get Medicaid or employer coverage, poorer Americans may not be able to afford to purchase the required private insurance. The new law would have left between 15 and 20 million Americans uninsured even before the Medicaid penalty was struck down. If some states refuse the Medicaid expansion, that number will go much higher.

The Court’s ruling reminds us that Medicaid has always been optional on the part of states, not a right to health care for poor citizens. When it was created alongside Medicare in 1965, Medicaid built on existing federal supports for state-based welfare programs. The program maintained a tradition of states’ rights in welfare provision by stipulating that individual states would not be required to participate. More federal money and greater coverage for poor citizens were certainly strong incentives, and all states did eventually join Medicaid, but this took years—the last holdout was Arizona, which finally created its Medicaid program in 1982. In states that are slow to expand Medicaid under the ACA or refuse to do so altogether, many vulnerable individuals and families will fall through the cracks.

To truly achieve universal coverage, Congress could have built on precedent by proposing a program akin to Medicare, financed through a payroll tax and covering everyone. In 1965, the politicians who created Medicare did something similar when they decided to graft their new program onto the already-existing Social Security system, for the sake of simplicity and also because Social Security was already widely understood by, and popular with, the public. Despite the vigorous opposition of the American Medical Association, this strategy led to a victory for Medicare in Congress and its swift acceptance by a large majority of the population—without a constitutional challenge (Congress has the authority to tax). In 2009-10, under very different political conditions, President Obama and the ACA’s Congressional sponsors decisively rejected a Medicare-for-all option as politically unfeasible, proposing the individual mandate instead. That decision both postponed the goal of universal coverage, and led to the prolonged and agonizing legal battles we just witnessed.

The Supreme Court has now affirmed the constitutionality of a tax penalty for not purchasing health insurance. The nation still needs to tackle the challenge of how to include everyone, and to confront the question of whether we can rely on the private insurance market, however extensively regulated, to protect the health and ensure the economic security of the American people.

—Beatrix Hoffman is chair of the history department and associate professor at Northern Illinois University.